Cover Story: Hot Growth Companies: ANCHOR GAMING
A HIGH ROLLER HITS THE JACKPOT
Stanley E. Fulton, CEO of Anchor Gaming, has always loved a game of chance. But he has never beaten the odds like this before. Just two years ago, his slot-machine company, Las Vegas-based Anchor, went public at 14. Today, Anchor's shares trade at about 48. "There's nowhere to go but up," says the chain-smoking Fulton, sounding like a high roller on a hot streak.
Fulton, 65, appears to have more than luck on his side. He has the Wheel of Gold, one of the industry's hottest slots. Since their 1995 introduction, casinos have put in 300 of the gleaming white Wheels and ordered 700 more. Essentially a souped-up slot machine, it's outfitted with a colorful roulette-like wheel, which spins every 68 plays or so. When it does, the prize displayed can triple a player's winnings. Wheel of Gold brings in about $250 a day at large casinos, compared with an average take of $150.
Unlike the gamblers, Anchor Gaming always comes up a winner. While rivals such as International Game Technology and Bally Gaming International Inc. make their money selling machines--which typically go for about $6,000--Anchor provides Wheel of Gold to casinos for free. So how does it make money? Each time that wheel spins, Anchor collects about $1.50. It adds up: Sales from Anchor's proprietary games unit have risen to $14 million from $117,000 in 1993.
SCHMOOZER. That's not the only card Fulton has up his sleeve. Most of Anchor's revenues and profits come from its two Colorado casinos and its machines in stores throughout Nevada. To get space in the stores, Fulton personally schmoozes with proprietors. "He's an old-fashioned entrepreneur," says Andrew S. Zarnett, an analyst with Ladenburg, Thalmann & Co. "People love him." Fulton just extended an exclusive deal with Smith's, Nevada's largest grocery chain.
Since 1993, Anchor's earnings and revenues have nearly tripled, to $20 million and $111.4 million, respectively, winning Anchor the No.31 spot on BUSINESS WEEK's 1996 Hot Growth list. Zarnett--whose company underwrote the IPO--thinks Anchor will earn $31.2 million in the fiscal year ending in June, 1997, on revenues of $137.8 million.
Life dealt Fulton a few lemons before he hit the jackpot. A Maryland native, he managed a hardware store and dabbled in real estate and cable TV before getting involved in gaming. Forced out of two companies he founded--Fortune Coin and Alliance Gaming--Fulton started Anchor in 1989. He made inroads by paying stores unusually high rent in exchange for 100% of the take.
To keep the quarters rolling in, Fulton will launch a new slot later this year that resembles a jukebox, called Rock-n-Reels. He's also adding a 120-room hotel to one Colorado casino. That may seem like small potatoes compared to Vegas. But with his family's 51% share of Anchor now worth $333 million, Fulton is spinning his own wheel of gold.By Eric Schine in Las Vegas